Maersk posts record first-quarter earnings

The ongoing challenges facing the containerised supply chain have helped push Maersk to a record first quarter for earnings and profitability in a market that is set to remain disrupted into the fourth quarter of the year.

“AP Moller-Maersk delivered an exceptionally strong performance in the first quarter of 2021 with record profit for the quarter,” said chief executive Søren Skou. “The high growth and profitability were driven by solid demand across ocean, logistics and terminals.

“Strong demand led to bottlenecks and a lack of capacity and equipment, which drove up freight rates to record-high levels.”

While year-on-year comparisons were boosted by the downturn in the first quarter of last year as the pandemic took its initial toll on volumes, Maersk’s results were impressive in absolute terms.

Earnings before interest, tax, depreciation and amortisation more than doubled to $4bn on revenues of $12.4bn, while underlying profits of $2.7bn were only just short of the $2.9bn achieved in the whole of 2020.

“Overall, we can be very satisfied with how the business performed this quarter,” Mr Skou said.

“High profitability led to a return on invested capital of 15.7%, and our strong free cashflow gives us the opportunity to invest further in the transformation of the business, while accelerating the remaining part of the ongoing share buy-back programme and subsequently launch a new, additional share buy-back programme of approximately $5bn over the coming two years.”

With the “exceptional market situation” due to continue well into the fourth quarter of the year, Maersk expects an operating profit in the range of $13bn–$15bn for the full year.

“Maersk now expects the current exceptional situation, with the demand surge leading to bottlenecks in the supply chain and equipment shortage, to continue well into the fourth quarter of 2021 versus previously expected to continue in the first quarter and normalise thereafter,” the company said.

The company’s ocean segment is still expected to grow in line with global container demand, which is now expected to grow by 5% to 7% in 2021, primarily driven by the export volumes out of China to the US, with the highest growth seen in the first half of the year.

“The high growth and profitability were driven by solid demand across ocean, logistics and terminals, coupled with strong freight rates,” Mr Skou said. “Strong demand combined with bottlenecks, lack of capacity and equipment shortage in the global supply chains drove freight rates up significantly.

“While the pandemic continues to impact the industry with a temporary economic upside coupled with significant operational challenges, our focus remains on the long-term transformation of our business, prioritising our customer’s wish for connected logistic services now and in the future.”